LF Lindsell Train UK Equity Fund

All data at 31 December 2020 Fund Objective & Policy Fund Assets To deliver capital and income growth and provide a total return in excess of that of the FTSE All-Share TR £6,464m Index by investing at least 80% of the fund in the shares of UK domiciled companies. Whilst the primary focus will be in the UK, the fund may also invest in other global markets. Share Price The FTSE All-Share TR Index has been selected as it represents broad exposure to companies listed on Acc 467.06p the . The fund is not constrained by the target benchmark and will take positions in individual stocks that differ significantly from the Index with the aim of achieving a return in excess of Inc 327.68p the benchmark. D Acc 191.29p There is no guarantee that a positive return will be delivered. D Inc 165.83p Fund Profile Source: Lindsell Train Limited and Link

Fund Administrators Limited. The portfolio is concentrated, with the number of stocks unlikely to exceed 35.

Portfolio Manager Calendar Year Performance (%) 2016 2017 2018 2019 2020 Nick Train LF LT UK Equity Fund (Acc) +11.3 +20.7 -1.1 +22.8 -2.5

FTSE-All Share TR Index +16.8 +13.1 -9.5 +19.2 -9.8

Cumulative Performance (%) Since 31 December 2020 Launch 5yr 3yr 1yr YTD 3m 1m LF LT UK Equity Fund (Acc) +367.1 +59.1 +18.5 -2.5 -2.5 +3.4 +1.6 FTSE All-Share TR Index +106.1 +28.5 -2.7 -9.8 -9.8 +12.6 +3.9

Source: Morningstar Direct & FTSE Russell (FTSE) © 2021. “FTSE Russell®” and “FTSE®” are trademarks of the Group companies and are used by FTSE Russell under licence. Fund performance is based on Acc shares. Total return is provided net of fees. Past performance is not a guide to future performance. Strategy Profile Historic Gross Yield (Income Class) Top 10 Holdings (% NAV) Sector Allocation (% NAV) 1.8% London Stock Exchange 9.88 Financial Services 26.0 The Historic Yield reflects distributions declared over the RELX 9.75 Beverages 23.0 past twelve months as a percentage of the mid-market 9.55 Personal Goods 17.5 unit price, as at the date shown. It does not include Media 15.2 any preliminary charge and investors may be subject to 8.98 tax on their distributions. 50% of the Fund’s expenses Food Producers 7.4 * 8.53 are charged to capital. This has the effect of increasing Software 5.5 the distributions but constraining the Fund’s capital 8.04 performance to an equivalent extent. The yield is not Support Services 2.4 Mondelez 7.40 guaranteed or representative of future yields. Travel & Leisure 2.1 6.51 Source: Morningstar Direct Cash 0.9 Heineken* 6.41 Total 100.0 Sage 5.47 * aggregate holding across all share classes

Fund Information Minimum Investment: ISIN : Acc/Inc: £500,000 Acc: GB00B18B9X76 D Acc/D Inc: £200m Inc: GB00B18B9V52 Type of Scheme: Non UCITS Retail D Acc: GB00BJFLM156 D Inc: GB00BJFLM263 Launch Date: 10 July 2006 Management Fees: Acc/Inc: 0.60%p.a. SEDOL : Classes: Accumulation/Income/D Accumulation/D Income D Acc/D Inc: 0.45% p.a. Acc: B18B9X7 Base Currency: GBP (£) Ongoing Charges Figure (OCF)*: Inc: B18B9V5 D Acc: BJFLM15 Benchmark: FTSE All-Share TR Index Acc/Inc: 0.65% p.a. D Inc: BJFLM26 D Acc/D Inc: 0.50% p.a.

Dealing & Valuation: 10 am each UK Business Day

Year End: 31 May A copy of the latest prospectus and the Key Investor Information Document for each class is Dividend XD dates: 1 Dec, 1 June Pay Dates: 31 Jan, 30 Sept available from www.lindselltrain.com

*The OCF is a measure of the Fund’s total operating expenses over 12 months, including management fee, as a percentage of the Fund’s net assets averaged over the same period. It is calculated by the Fund Administrator and published in the KIID, dated 8 May 2020. It is an indication of the likely level of costs and will fluctuate as the Fund’s expenses and average net assets change. The OCF excludes any portfolio transaction costs.

Authorised Corporate Director (ACD)/Authorised Fund Manager: Link Fund Solutions Limited

Investment Manager & Promoter: Lindsell Train Ltd, 66 Buckingham Gate, London, SW1E 6AU, Phone: +44 20 7808 1210 / [email protected]

Fund Administrator, Dealing & Registration: Link Fund Administrators Limited. Phone: +44 113 224 6000

Depositary & Custodian: The Bank of New York Mellon (International) Limited

Issued and approved by Lindsell Train Limited. Authorised and regulated by the Financial Conduct Authority. Portfolio Manager’s Comments

The last 12 months have been as challenging as I can recall as a professional investor. Of course, for all of us as individuals it has been challenging and distressing too. Over the course of 2020 your Fund’s NAV was relatively resilient, compared to steeper falls across the UK stock market. We believe this resilience is the result of the quality of the companies we have chosen to invest in – their predictability and conservatism. However, through December and indeed the final quarter of the year, the Fund has lagged the FT All-Share Index, as confidence about the deployment of vaccines has brought a big bounce in shares of companies worst hit by the virus. Of course, we hope the vaccines will be successful and economies and stock markets will continue to recover. It is important to note that the Fund closed the year with only 0.15% in investible cash – in other words effectively fully invested. This is because we want to ensure that investors who have entrusted their savings to us get as full participation as possible in the short-and long -term rewards from investing in the strategy.

As we enter a new year, there are several observations I believe are relevant about the structure of the Fund and the outlook for future performance.

First, the portfolio remains, as always, very predominantly made up of big companies. Just about 90% of the portfolio is invested in FTSE100 companies, or their equivalent, where we own non-UK names. Having said that, many of these so-called “big” companies we hold are, to our minds, still small companies relative to their future potential and warranted value. For instance, we hope that FTSE 100 holdings Burberry, Hargreaves Lansdown, LSE and RELX could grow to be very much bigger companies in years to come; remember, according to the company, Diageo only accounts for 4% of the world’s booze consumption – plenty more to go for.

In passing, there are three non-UK holdings in the Fund – Heineken, Mondelez and Remy Cointreau. Mondelez is an inherited holding, deriving from our investment in at the time of its takeover. Mondelez increased its dividend by 10.5% in 2020, as its iconic brands, led by Cadbury and Oreos, continued their steady growth in markets around the world. The other two are, not coincidentally, both family-controlled alcoholic beverage businesses, where the eponymous brands, Heineken and Remy Martin, account for much of the value of the companies. We very much like investing in such situations, observing that many of the world’s most enduring family fortunes have been based on multi-decade or even multi-century ownership of iconic booze brands. As discussed below, Heineken had a difficult 2020. However, even at its depressed end of 2020 price, Heineken shares are up 24-fold since 1990, for an annualised compound growth rate of 11%. We believe there is every reason the shares could do as well over the next few decades. Meanwhile, Remy was the best performer in your Fund in 2020, up 47% - as drinkers around the world, especially Asia, drowned their sorrows in premium cognac.

Next, the way we think about the structure of the portfolio is as follows.

Around 41% is invested in companies which we believe have the potential to be digital winners. This proportion includes not only obvious data analytics or technology businesses such as RELX or Sage, but companies in other industries that are doing value-creating things with data or technology to deepen their relationships with their customers, such as Daily Mail & General Trust and even Manchester United.

Next, we have c32% in companies which own beloved and trusted consumer brands. The biggest holdings here include Diageo, Heineken, Mondelez and Unilever. The way consumers have flocked to such brands in 2020, perhaps for reassurance, has certainly been reassuring for their investors.

There is an additional 17% in companies which own luxury or premium brands (and note, I have included 2% in this category from our holding in Diageo, to represent the c20% of DGE’s revenues that derive from its wonderful and rapidly growing reserve/premium brands). Burberry and Remy Cointreau are other important positions.

The balance is held in what we call stock market proxies, specifically asset management companies with growing private wealth franchises, with Schroders the biggest. We see the provision of private wealth advice as another service that has an opportunity to harness 21st century technology to improve customer experience and shareholder returns.

This portfolio structure has not changed much in recent years. To us these are four, long term, winning ideas that we hope will go on winning.

However, at the margin we would like and expect to see the 41% in Digital Winners and the 17% in Luxury and Premium go up further – as a result of capital appreciation and us deploying more capital. And to demonstrate our intent, we have initiated two new holdings for your Fund during 2020, taking advantage of the tumultuous conditions. Namely, , now built to a 2% position – which is certainly one of the UK’s very rare multi-billion market cap, globally relevant digital leaders. And then in premium, we were lucky to find a very depressed point to initiate in Fever -Tree, now also a c2% holding. We intend to add to both.

A final observation. I am always cautious about making any investment call based on macro-economics or politics – because my track record in doing so is poor. Nonetheless in recent years, as a longstanding practitioner in the UK Equity market I have had a strong sense that the uncertainty surrounding the UK’s protracted divorce from Europe has discouraged global investors from allocating to the London stock market and positively encouraged hedge funds to short London shares and go long of other markets without the same political and currency worries. Certainly, we have watched wider and wider divergences develop between the share price performance and the valuations of similar UK and non-UK companies. For instance, would Remy’s share price have been up 47% in 2020 if it were a London- listed security? Would Diageo have been down 10%, except for its UK domicile? We expect not. There are many other examples and for us, therefore, it is no accident that the UK stock market has rallied since the Brexit deal was announced. A big uncertainty has been removed and investors can now shop for bargains.

To conclude this report, I want to share some company specific observations with you. These are pieces of information that have recently been revealed about portfolio companies that we regard as relevant and encouraging. They are the sort of data points or anecdotes we monitor all the time.

So – for instance, one of the best pieces of good news I have heard for months was revealed in RELX’ 9-month results. The company was able to report that submissions to its subscription scientific journals had accelerated in 2020 and were up 25% year-on-year. Meanwhile, submissions of articles to its rapidly growing open-access journals have doubled in 2020. Why is that good news? Well because it shows the continuing relevance of Elsevier as a place for scientists to get their research recognised in a digital world. But the even better news is that scientists are clearly redoubling their efforts to find solutions to humanity’s problems. We wish them well.

In Unilever’s most recent quarterly results the company reported its e-commerce revenues were up 76% year-on- year, up to 10% of the total. This does not mean that Unilever is turning into an Internet business, but it does give reassurance that its brands - from Ben & Jerry’s to Domestos – can remain relevant in an increasingly digital world. By the way – have you tried Unilever’s new Marmite-infused peanut butter? It’s divine.

Heineken had a very tough year, as bars and clubs across Europe have been and still are shuttered. So, we weren’t surprised to see at its 9 month results that organic volumes of its beverages around the world were down 8% in aggregate, with profits down a lot more than that. However, within that volume number we note that the volumes of Heineken’s biggest and most profitable brand were actually up. That’s the Heineken brand itself, of course and admittedly they were up only 1%. Nonetheless, we thought to deliver any growth was a notable achievement in the circumstances, partly driven by the success of its newly launched alcohol-free Heineken 0.0 and shows the potential that is still available to this truly global brand. There was a 20% bounce in Heineken shares on the Pfizer vaccine news and we hope more to come as the world reopens.

Another company that had a tough 2020, again unsurprisingly, was Manchester United, which has just reported a quarterly loss – in part because of loss of revenues from match days. I mentioned above that we include Man Utd amongst our hoped-for digital winners. The reason is we expect the digital technology platforms to push up the value of the sports broadcast rights as they increasingly compete against each other – Amazon, of course has led the way, already acquiring a parcel of Premiership rights. And there is no doubt about the continuing global fascination for football. Consider one growth statistic Man Utd was able to share at its results. Over the last 12 months hits to the club’s social media sites numbered 1.1bn, up 24% over last year. In a digital world such attention is increasingly valuable. Manchester United’s shares have rallied over 20% since the start of November – but still offer meaningful strategic value, in our opinion.

There are many other examples I could share, but the point should be clear. In a year like 2020 it is so important not to confuse short term, one-off, difficulties with underlying and long-term strategic progress. We believe almost all the companies in your portfolio are more valuable today than they were at the start of 2020 (even if their share prices have not yet reflected that value). Either because they have proven themselves resilient during the most stressful circumstances or they have found new ways to create profitable value, often by exploiting digital technology.

Nick Train, 8 January 2021

Source of Data: Lindsell Train Ltd & Bloomberg; as of 31st December 2020

Note: All individual stock returns are price returns in GBP.

The top three absolute contributors to the Fund’s performance in December were London Stock Exchange, Hargreaves Lansdown and Schroders and the top three absolute detractors were Unilever, Sage, and Heineken.

Risk Warning Past performance is not a guide or guarantee to future performance. Investments carry a degree of risk and the value of investments and income from them as a result of market or currency fluctuations may go down as well as up and you may not get back the amount you originally invested. To the extent that the portfolio invests a relatively high percentage of its assets in securities of a limited number of companies, and also invests in securities with a particular industry, sector or geographical focus, the portfolio may be more susceptible than a more diversified portfolio to large swings (both up and down) in its value. Furthermore, the concentrated nature of the portfolio can also lead to relatively significant holdings in individual securities which in turn can have an adverse effect on the ability to sell these securities when the Investment Manager deems it appropriate and on the price of these securities achieved by the Investment Manager at the time of sale. The LF Lindsell Train UK Equity Fund (the “Fund”) is an open ended investment company (OEIC) authorised and regulated by the Financial Conduct Authority under Regulation 14 of the OEIC Regulations 2001. This document is intended for use by Shareholders of the Fund or UK authorised persons or those who are permitted to receive such information. Nothing in this document should be construed as giving investment advice or any offer, invitation or recommendation to subscribe to the fund. Any decision to subscribe should be based on the Fund’s current Prospectus and Key Investor Information Documents (KIIDs). Opinion expressed whether specifically, or in general, or both on the performance of individual securities and in a wider economic context represents the view of Lindsell Train Limited at the time of preparation. They are subject to change and should not be interpreted as investment advice. The information provided in this document was captured on the date issued below and therefore is not current. Current prices, and the latest copy of the Prospectus can be obtained from the Fund Administrator. No part of this document may be copied, reproduced or distributed to any other person without prior express written consent from Lindsell Train Limited.

14 January 2021 LTL 000-243-5 Issued and approved by Lindsell Train Limited. Authorised and regulated by the Financial Conduct Authority.